Oversupply and lowered prices at Dubai’s property make developers postpone their plans for marketing new real estate projects. Read more to find out if oversupply is really that scary, and how many new units are expected in Dubai by the end of the year.
Dubai developers launched 9,034 new property units, both apartments, villas and townhouses, year to date in 2018, according to data revealed by GCP-Reidin consultancy. To compare, across the whole year of 2017, a total of 46,893 real estate units were launched.
The decline in the number of launches is a result of the demand and supply imbalance caused by excessive construction activity in recent years, resulting in oversupply, experts say.
"In turn, property take-up rates have fallen, leading to a decline in sales prices, translating into lower potential profit margins for developers. As a consequence, some developers are delaying coming to the market," explains expert from Chestertons Mena.
After last year's construction boom, developers seem to reduce some of their most expensive post-handover incentives. That’s why recent demand in the off-plan market has lowered, with some attention turning instead towards the ready property market.
"The current and anticipated oversupply situation has resulted in developers taking a cautious approach in regard to project launches,” observes Jenny Weidling, manager - research and advisory, Asteco Property Management.
Last year Dubai developers delivered 27,968 homes in Dubai against analysts' expectations of 31,000 units,which means a completion rate was about 90 per cent, while the previous years’ completion rates rarely ever crawled above 61 per cent mark.
"The subdued number of launches may release pressure off those projects that are currently under construction and could even have a positive impact on the absorption rates of some of the developments in the market," concludes Dima Isshak, senior consultant - strategic advisory, CBRE.
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